World Energy Focus - Agosto 2015

Turkey, faced with strong demand growth and high import dependency,
is undertaking ambitious projects in new nuclear power, coal power and
renewables. In an exclusive interview with World Energy Focus, Taner Yildiz,
Minister of Energy and Natural Resources, says the government is shaping
the energy strategy, but the private sector will have to make the investments.
“Having put in place a transparent, competitive market structure, I am
confident we are able to ensure security of supply though the market.”
Few countries face greater energy
challenges than Turkey. Not only
has the country had the second
highest growth in gas and electricity
demand in the world over the past
decade, after China, it also has to
import three-quarters of its energy
resources. In addition, Turkey aspires
to be an energy hub between East
and West – and is serious about its
climate commitments. The man who
is responsible for balancing these
competing concerns is Taner Yildiz,
who has stood at the helm of the
Turkish Ministry of Energy and Natural
Resources since 2009. An electrical
engineer by education and experience,
Yildiz has a clear vision of Turkey’s
energy course: the State should
direct the energy system, the market
should do the work, guided by an
independent regulator. Top priority for
the government: security of supply. We
interviewed the Minister as the World
Energy Council’s Turkish National
Committee is preparing for next year’s
World Energy Congress, which Yildiz
promises will be “the biggest ever”.
Security of supply is regarded as the
top priority of your Strategic Energy
Plan (2015-2019). Do you believe a
competitive energy market dominated
by private players can guarantee
security of supply?
As you know, energy investments are
large, requiring long term finances
and a great deal of market analysis
in advance. I believe the private
sector should invest in the energy
sector. Governments should tend
to channel their public funds to
social programs and infrastructure
projects. In the past, the State
took care of energy infrastructure
investments. In the 1980s and
1990s we started experimenting with
public-private partnerships. Then,
partly as an effort to align with the
Acquis Communautaire of the EU,
we adopted extensive reforms to
achieve a transparent, competitive
and fair playing ground for private
sector actors. Since 2001, our laws
actually dictate that the State will not
make additional investment in the
electricity generation sector as long
as private sector investments are able
to guarantee security of supply. It is
an honour for me to underline that this
strategy has been successful until now.
Rosatom’s subsidiary Akkuyu NGS has
recently been rewarded a preliminary
license for building Turkey’s first
nuclear power plant at Akkuyu,
in Büyükeceli, Mersin Province, which
is to start operations in 2023. Do you
believe nuclear power to be cost-
effective over the long term, given
the fact that the cost of renewables is
coming down quickly?
I agree that renewable technologies are
fast becoming more competitive. Yet
we are not totally there. Furthermore,
Turkey needs more baseload capacity
and nuclear power is the most reliable
option for this. So,
World Energy Focusmonthly insights from the Council’s global leadership community
#14 • august 2015
For sustainable energy.
World Energy FOCUS is sponsored by DNV-GL
INSIDE THIS ISSUE
Special feature
How to cope with the
renewables revolution
The World Energy Council’s
‘Knowledge Network on Renewables
Systems Integration’ is studying
how countries across the world are
integrating variable renewables into
existing networks – and has some
useful advice to offer. 4
News Focus
Nuclear accord
heralds opening of Iran’s
energy sector 6
Innovative finance could
raise sustainable energy
investment by $120 billion
per year 7
China’s State Grid to build
transmission line from hydro
plant Belo Monte
in Brazil 8
Kenya breaks ground on
Africa’s largest wind farm 8
Country Focus
The Ecuadorian energy
transformation: “This will
give us a huge competitive
advantage” 9
Events 10
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> see page 2
“The private sector can ensure
security of supply through a
transparent, competitive market”
Interview Taner Yildiz,
Minister of Energy
and Natural
Resources, Turkey

World Energy Focus #14 • august 2015 • page 2
interview
going nuclear is not just a price-based decision,
but part of a grand strategy taking supply security
concerns into account. Still, these are long-term
decisions and inherently involve some of the risks
you hint at, but I believe the agreement we have
reached with our partners in nuclear deals could
be considered even-handed.
The Akkuyu nuclear power plant (NPP) is being
financed by Rosatom, but how will it operate in
the market? Will it get a fixed payment from the
government?
For Akkuyu NPP, for the first two of a total of
four units, the government has pledged to buy
75% of the electricity generated at a previously
determined price. For the remaining two, when
they come on-line, only 25% will be bought by
the government. So, in sum, 50% is to be bought
by the government. The rest will be sold in the
market and will have to compete.
Do you intend to further expand nuclear power
capacity to 10,000 MW as mentioned in your
Strategic Energy Plan?
Akkuyu with Rosatom will have 4800 MW total
capacity. We have also concluded a deal with
our Japanese counterparts who formed a
consortium with the French to build the second
NPP of Turkey in Sinop. Its total capacity
is expected to be 4400 MW. And we are
considering additional opportunities, watching
the markets, evaluating options under alternative
scenarios and technologies.
How can you guarantee safety in view of the
earthquakes that regularly occur in Turkey?
Well, geography still decides fate of the nations.
Turkey has always been an earthquake prone
land. We have suffered much in earthquakes, but
we are learning from our bitter experiences. Much
has been done in upgrading building codes. Even
more attention is paid to the safety of energy
infrastructure. Earthquake and environmental
safety is our top-most priority in nuclear projects.
We have demanded safety requirements well
beyond international standards.
How far do you want renewables to expand in
the next five years and how will you ensure that
this happens?
Currently the share of renewable contribution
to the electricity mix is on average around 28%
(mainly hydroelectricity). According to our Strategic
Plan for 2019, we are planning to increase
hydroelectric capacity from 25 GW to 32 GW,
wind capacity from 5 GW to 10 GW, geothermal
capacity to 700 MW, solar capacity to 3 GW
and biomass capacity to 700 MW. We will keep
on supporting renewables in the form of feed-in
tariffs and other support mechanisms. The Turkish
renewable market is currently booming and there
is huge investor interest. So I believe we will reach
these targets, but we can provide additional
support mechanisms if the necessity arises.
You want to reduce the share of natural gas
in power generation. Doesn’t this contradict
Turkey’s desire to be a major gas hub?
Energy import bills comprise the biggest share of
our total imports and a considerable portion of our
trade deficit. Natural gas constitutes almost half of
the fuel mix of our electricity generation and 98%
of that gas has to be imported. Numerous supply
crises that we experienced in the past, some as a
result of market conditions, others due to state-
to state interactions, made us
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> see page 3
going nuclear is
not just a price-based
decision, but part of
a grand strategy
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decide that we have to do something
about it. Our target is to reduce the
share of natural gas in electricity
generation from 44% now to 38% by
the end of 2019. This target does not
contradict our plans to be a major gas
hub. Even when the share of natural
gas decreases, in absolute terms
demand and the volumes consumed
will still keep on rising!
When do you think you can reach agree
ment on Turkish Stream and how will
this affect your relations with Russia?
We have mostly had good energy
relations with Russia and this continues
to be so. Additionally, energy trade
between us is increasing. I think that
Turkish Stream is a feasible project
and can be achieved. As our energy
partnership is improving, so do our
relations in general.
What is your domestic shale gas policy?
We are watching the shale gas
revolution with great interest and keep
in touch with sector actors. Some shale
gas deposits are already identified. We
would like to utilise them if possible, of
course paying utmost attention to the
environment.
The Strategic Plan mentions an
intention to expand electricity
generation from domestic coal-fired
power. What does this mean in regard
to your climate commitments?
Currently, the contribution of
indigenous coal power plants to
electricity generation is around 40
TWh but we are planning to increase
it to 50 TWh by 2017 and 60 TWh by
2019. In order to realise these goals,
we know that we have to accelerate
investments in the coal sector and
explore new coal fields. We are
considering options such as awarding
the coal fields in the form of royalties
to possible investors. In addition,
we will modernise existing plants to
improve efficiency and limit negative
environmental effects. I would like to
underline that per capita emissions of
Turkey are well below OECD averages
and apart from renewables, lignite
and hard coal resources are the only
indigenous alternatives we have to
cover ever increasing demand. Even
after the realisation of these projects,
our emissions will be considerably
less than those of many developed
countries.
The Plan pays a lot of attention to
demand side management, energy
efficiency and energy saving.
However, it also notes that so far
not much has been achieved
on this front. How do you intend
to change this?
There is a great potential for efficiency
gains in Turkey, especially in buildings,
industry and transport. In fact, we
consider energy efficiency as an
additional energy source and my
ministry will continue to utilise it to the
highest extent. We have reorganised
our institution responsible for carrying
out and coordinating energy efficiency
activities in Turkey. We will improve
inspection and training, increase public
awareness, upgrade the regulatory
framework. We are planning to complete
our energy efficiency road map and
communication plan by next year.
What do you expect to come out
of the Paris Climate negotiations in
December? What do you regard as
a possible climate commitment for
Turkey in Paris?
Turkey has some special circumstances
which have also been recognised by
the Convention Parties in Cancun,
Mexico. In Doha in 2012 it was
decided to provide support for Turkey
in technology, capacity building and
financial mechanisms. We do our best
but it is a little bit early to be too
specific about commitments. Yet I want
to be optimistic about the outcomes
of the Paris Climate Negotiations in
December. This is a huge process and
I believe as humanity we are making
some progress although not as fast
as hoped. ●
About Taner Yildiz
Taner Yildiz graduated from Istanbul
Technical University as an electrical
engineer and worked for Kayseri
Electricity Generation Company.
He was elected to the Parliament in
2002 and was appointed Minister of
Energy And Natural Resources on 1
May 2009.
Yildiz says that being an electrical
engineer “helps me a lot in not
only running the daily affairs of the
ministry, but also in developing
future-oriented strategies. As I have
educational background and work
experience in the energy sector, it
is easier to follow and understand
new developments, be it in the field
of energy related technologies or
in energy markets. I can develop
deeper understanding and form
common grounds when in touch
with representatives of the energy
industry. As a matter of fact, my
colleagues suggest they do not have
to work so hard to brief me about
my agenda.”
interview
I think that Turkish
Stream is a feasible
project and
can be achieved Bridge over the Bosphorus. Photo Esin Ustün
About the World
Energy Congress
Turkey is the host of the World
Energy Council’s 23rd
World Energy
Congress, which will be held 9-13
October 2016 in Istanbul. Yildiz says
he believes “this congress will be the
most successful one ever organised
with record level participation and
high level of interest. This will also
be a perfect chance of publicity
for investment opportunities in the
Turkish energy sector. The successful
completion of the Congress will
provide further prestige to Turkey
and accelerate its recognition as an
important energy actor in the region.
For all these reasons, my Ministry is
providing all support to the Turkish
National Committee and the World
Energy Council and will continue
to do so. I personally pay close
attention to the ongoing preparations
and my door is always wide open to
the World Energy Council and the
Turkish National Committee.”
http://www.wec2016istanbul.org.tr

Variable renewable energies are experiencing strong growth across the
world. How far will this trend go? What will be its impacts? The World
Energy Council last year launched a global Knowledge Network on
Renewables Systems Integration that is examining these issues. We
take stock of some of the preliminary findings. Main takeaways: the right
policies will be crucial to limit costs and ensure smooth integration of
renewables. And: there is no one-size-fits-all approach.
Views differ as to how ‘big’ renewable
energy will become over the next few
decades. The World Energy Council’s
Jazz and Symphony scenarios
project that renewables will increase
from around 15% in 2010 to almost
20% or 30% respectively in 2050.
The International Renewable Energy
Agency (IRENA) is more optimistic:
it projects in its Renewable Energy
Roadmap 2030 that global renewable
energy share could reach 36% by
2030 already.
Whatever the exact figure turns out to
be, it is clear that renewables are set
for a tremendous expansion. To study
the implications of this development,
late last year the World Energy Council
established a dedicated Knowledge
Network on Renewables Systems
Integration. This project is supported
by the World Energy Council’s
Global Partner CESI, an engineering
consultancy from Italy. Knowledge
Network Leader Dr Alessandro Clerici
and Project Manager Daniele Daminelli
are supported by other experts who
have conducted a large number of
renewable energy integration studies
in countries around the world. The
Knowledge Network, who will issue
their first official report in October
2015 at the World Energy Council’s
Executive Assembly in Addis
Ababa, already has over 50
members representing more than
40 different countries.
The main objective of the Knowledge
Network is to increase awareness and
understanding of the issues arising
from the integration of intermittent
and volatile renewables into
electricity systems. Based on single
country case studies, the Network
will highlight impacts on systems
operations to help ensure maximum
deployment and smooth integration
of renewables.
lessons learned
What are the lessons learned so far?
To begin with, notes Matteo Codazzi,
the CEO of CESI, policymakers often
underestimate the cost of renewable
energy subsidies and the strain they
place on national economies. As
an example, the cumulative cost of
Italy’s FIT (Feed-in-Tariff) programme
between 2000 and 2014 is estimated
at €200 billion. In 2015 alone a further
€14 billion is expected to be spent
on subsidies for renewable energy,
equivalent to almost one third of the
Italian education budget.
This can lead to higher electricity
prices for end users. Retail prices in
Italy have increased significantly for
many electricity consumers. In Spain,
prices have doubled from €0.09
per kWh in 2004 to €0.18 per kWh
in 2013. In comparison, household
electricity prices in the United States
have remained relatively stable over
the last decade at around €0.13/kWh.
High energy prices can severely affect
net exports. According to the IEA
(International Energy Agency), the
European Union is expected to lose
one-third of its global market share
of energy intensive exports over the
next two decades, due to high energy
prices and generous subsidies for
renewable energy.
follow the weather
Paradoxically, the rapid growth of
renewable energy has also reduced
wholesale prices in Europe. The merit
order switched as renewables, with
their zero variable cost of production,
get dispatching priority over thermal
power plants. As a result, wholesale
prices for baseload power in Germany,
for example, have fallen dramatically
from €90/MWh in 2008 to €32/MWh
in 2014. This has had a number of
consequences. For one thing, profit
margins for utilities have been severely
reduced. Many new gas-fired power
plants have become economically
uncompetitive, forcing owners to close
or divest them.
Another consequence, as shown by the
studies of the Knowledge Network, is
that while in the past wholesale prices
followed the demand curve, today they
follow the weather; falling when the sun
shines and the wind
special feature
> see page 5
How to cope
with the
renewables revolution
Photo Asian Development Bank

special feature
blows and going up when, in particular
at times of high demand, the sun
does not shine and the wind does not
blow. Thus, price forecasts and energy
trading now require more skill sets and
different know-how, including weather
forecasting abilities.
So what can be done to make
the expansion and integration of
renewables as smooth as possible?
The good news is that subsidies may
be reduced, as costs of renewable
energies are coming down quickly.
Most impressively, the levelised cost
of electricity (LCOE) of solar PV has
halved between 2010 and 2014. “This
technology is becoming competitive
at the utility scale”, notes Codazzi.
“Last year, Dubai produced the world’s
cheapest solar energy ever with a
tender placed at an unprecedented
$0.0598/kWh.”
on and off
But there are still challenges to be met.
Measures have to be taken to integrate
variable solar and wind power into the
grid. Because of the variability of wind
and solar, thermal power plants are
required to provide backup capacity
to ensure the reliability of the system.
Studies from the Knowledge Network
show that grid demands on generation
have increased significantly, as thermal
generators have to switch on and off
or start up power plants that are not
designed to run in variable mode as
required by rapidly changing market-
based dispatch. Discussions regarding
the introduction of a capacity market
are going on in several EU countries.
At the same time, large-scale
investments in the grid are required to
expand transmission grids so that they
can accommodate the increasing share
of variable renewable energies. For
example, the total investment cost for
the grid connection of new solar and
wind capacity in Germany is estimated
to be around €40 billion over the next
10 years.
In addition, higher penetration of
variable renewable energies requires
increased flexibility from the power
system. This can be achieved by
implementing sub-hourly scheduling
and dispatch intervals and shorter
gate closure periods as well as
establishing capacity and other
ancillary services in markets.
Countries that make use of flexible
storage and demand response
systems can support the integration
of variable renewable energies
through load shifting, balancing and
frequency regulation.
Findings from the Knowledge Network
show that it is important that solar
and wind power generators are
allowed to actively participate in
system integration as part of the entire
renewables deployment strategy. Also
important are grid codes to help ensure
that renewable energy is compatible
with, and can even help contribute to
the stability of, the power grid.
cheaper
Ruud Kempener ,Technology Roadmap
Analyst at IRENA, is confident that grid
integration challenges for renewable
energy can be solved. He notes that
“a transformation towards variable
renewables requires rethinking the
concept of baseload power plants.”
In a recent working paper, “From
Baseload to Peak: Renewables
Provide a Reliable Solution”, (http://
bit.ly/1DuzV3g), published in May
2015, researchers at IRENA argue that
baseload is a demand characteristic
rather than a supply technology
characteristic. Traditional plants are
operated in baseload mode, they note,
simply because they are not technically
capable of operating in a more variable
mode and need to achieve high
utilisation levels to recover their high
investment costs. “We have to think
of a new flexible system that works
around the free available electricity
that renewables provide. If you build a
system in such a way then as a whole
it can be cheaper than today”, says
Kempener.
For many the answer to grid
integration lies in growing deployment
of battery storage. Karl Rose,
World Energy Council’s Director of
Scenarios, notes that “storage is key.
Any new technology in mass storage
would be extremely interesting.”
However, he adds, “there is nothing
on the horizon in the next ten years
that will solve this. There have been
improvements, but nothing in the
pipeline that will structurally change
the picture or revolutionise it.”
going off-grid
And there is another solution as
well: micro-grids – or even going
off-grid altogether. This could be a
preferred option particularly in rural
regions in developing countries, notes
Kempener. “The emergence of off-grid
systems and mini-grids in developing
countries in rural areas is very
exciting.” He adds that “many small
developing island states have set
very ambitious targets – some even
at 100% of energy from renewable
energy systems. Once these models
are running they can be replicated.”
Codazzi agrees that “countries that
are still at the beginning of their
electricity sector transformation can
learn from best practices elsewhere”,
but he also stresses that, as case
studies from the Knowledge
Network have revealed, “there is
no one-size-fits-all approach and
each country has to craft its own
combination of policies, market
designs, and system operations to
achieve the system reliability and
flexibility needed to integrate variable
renewable energy.” ●
it is important that
solar and wind power
generators are
allowed to actively
participate in
system integration
About
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The nuclear accord signed on 14 July will revive Iran’s flagging oil exports
once sanctions are lifted, although the Iranian government is more
optimistic about the speed and size of the revival than outside analysts.
New gas exports will take longer to develop. European oil companies and
German equipment producers are already lining up to make deals, but the
Iranian government has yet to announce the terms. US companies will
most likely be left out for the time being.
Iran has the world’s fourth-largest proven
crude oil reserves and the world’s second-
largest natural gas reserves. Over a
decade of international sanctions have
slashed Iran’s oil exports and impeded
investment into upstream oil and gas
projects. The tightening of sanctions in
2012 led oil exports to drop by half, from
2.6 million barrels per day (bpd) in 2011
to 1.4 million bpd in 2014, according
to data from the US Energy Information
Administration (EIA). Exports to Europe
fell to a trickle while some remaining
buyers reduced import volumes, with
China, India, Japan, South Korea, and
Turkey being the main customers.
Sanctions are not expected to be
lifted until the end of the year at the
earliest, when the International Atomic
Energy Agency (IAEA) has verified
that Iran’s nuclear curbs are in line with
the agreement.
Iran’s Oil Minister Bijan Namdar
Zanganeh has promised to revive the
country’s output quickly. He claimed in
early June that as soon as sanctions
are lifted output could be ramped up
by 400,000 bpd and an additional
600,000 bpd after six months, i.e. 1
million bpd additional exports in total.
In early August he was quoted in the
Iranian press as saying that production
can increase by 500,000 barrels a day
within a week after sanctions end and
by 1 million barrels a day within a month
following that.
But analysts believe it will take at least a
year before Iran can ramp up production
significantly as it will still have to find
investment and technology. The EIA puts
the figure at 700,000 bpd by the end of
2016, while Wood Mackenzie estimates
600,000 bpd by the end of 2017.
new contract
Meanwhile, Iran has been working on
making conditions more attractive for
foreign investment. The government is
finalising a new type of contract that
will allow foreign firms to set up joint
ventures with its national oil companies
or their subsidiaries. Hossein
Zamaninia, Iran’s Deputy Oil Minister
for Commerce and International Affairs,
said at a conference on 23 July the
country is targeting up to 50 oil and
gas projects worth $185 billion, which
will be open to foreign firms via the
new model. The full terms of the Iran
Petroleum Contract are expected to be
revealed in late August to September.
Foreign businesses have been quick
to position themselves to capitalise on
the new opportunities. In the weeks
before the nuclear deal was signed
European and Asian energy company
executives, including from Shell and
ENI, already visited Tehran. And days
after inking the deal, Sigmar Gabriel,
the German Vice Chancellor and
Minister of Economy and Energy, led
a delegation of 60 German industry
and business executives on a visit to
Tehran to renew trade ties. In a meeting
on 21 July with the delegation, which
included Linde, Siemens, and BASF, Oil
Minister Zangeneh expressed hope that
German companies would participate
not only in Iran’s oil and gas projects
but more broadly in its energy sector.
“Iran will cooperate with German
companies for funding projects in the
petrochemical, refining, storage, energy
optimisation and renewable energies
sectors,” he told the delegation.
Carsten Rolle, Secretary of the
Weltenergierat, the World Energy
Council’s German member committee,
believes that the German machinery
industry will stand to gain from the
modernisation of both Iran’s economy
and its entire energy system, including
the phase-in of renewables. “Both will
be a prerequisite to increase the export
of gas and oil rather than consuming
them in the country,” he says.
The German example was followed by
French Foreign Minister Laurent Fabius
who visited Iran on 29 July. French oil
company Total was one of the biggest
customers of Iran, along with Shell,
before the sanctions kicked in.
gas exports
Shell is known to be interested in
developing Iran’s huge gas fields, but
the company’s financial chief Simon
Henry has said it will take time before
any deals can be concluded.
Much like the oil sector, the Iranian
natural gas sector has been
hampered by international sanctions,
notes the EIA. Iran was expected to
become one of world’s leading natural
gas producers and exporters, given
the country’s vast gas reserves, but
the country currently accounts for less
than 1% of global gas trade.
US firms will most likely take longer to
capitalise on the energy opportunities
that will open up in Iran. Barry
Worthington, Executive Director of the
United States Energy Association, the
World Energy Council’s US member
committee, says that in all likelihood
most of the oil field services contracts
in the next few years will go to
European or Asian companies due to
the history between the US and Iran.
“There is still going to be some deep
feelings on both sides,” he said.
However, he does not see the US
energy sector being worried at all
about losing out. “We have tremendous
opportunity right here, not just in the
United States, but in North America,”
he says, referring to US firms’ success
in Canada, potential opportunities
with Mexico’s energy reform, and the
need to improve the oil infrastructure
within the US. “I don’t think that US
companies are particularly concerned
that we might be disadvantaged.” ●
News Focus
Nuclear accord heralds
opening of Iran’s energy sector
Iran deal reached in Vienna
14 July 2015
Photo European External Action ServiceBank

News Focus
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Innovative finance could raise
sustainable energy investment by
$120 billion per year
Innovative financial mechanisms in four areas have the potential to boost
investment in sustainable energy by $120 billion a year by 2020, according
to a new report from the UN Sustainable Energy for All (SE4ALL) initiative.
The work, ‘Scaling up finance for
sustainable energy investments’, was
released at the UN Third International
Conference on Financing for Develop
ment in Addis Ababa, Ethiopia in July.
It finds that investment from the public
and private sectors will need to triple to
more than $1 trillion per year to meet
SE4ALL’s goals of ensuring universal
access, doubling the rate of improve
ment in energy efficiency, and doubling
the share of renewables by 2030.
The report identifies four financial
mechanisms that together could achieve
$120 billion in new investment, if they are
adopted widely:
• Expanding the Green Bond market
to drive fresh capital into new
sustainable energy investments,
in particular into the more nascent
project bond market and asset-
backed Green Bonds: $35 billion
• Developing tailored structures for
the private sector to co-lend with
development finance institutions,
while helping to refinance existing
loan portfolios by attracting new
investors: $30 billion
• Encouraging new construction-stage
lending and enabling later-stage
flows from institutional investors:
$30 billion
• Developing structures to aggregate
small-scale projects: $25 billion
“The report highlights some of the
practical ways for reducing risk,” says
Joan MacNaughton, member of the
Finance Committee of the SE4ALL
Advisory Board, which prepared the
work. She adds that it addresses the
barriers stopping available capital from
flowing to projects identified in the World
Energy Council’s Trilemma work.
“Unless developers see the risk equation
is right, they’re not going to bring
forward projects,” says MacNaughton,
who chairs the Council’s Trilemma work.
She points out several mechanisms
identified in the SE4ALL report as likely
to be particularly effective in reducing
risk. For example, international financial
institutions should expand their capacity
for sovereign guarantees to detach
country risk from project risk. Cutting
down on the transaction cost of project
development, streamlining negotiation
approaches, and standardising
environmental assessments could help
increase the pipeline of projects.
In addition, bundling off-grid and micro-
grid projects could help them secure the
investment needed to get off the ground.
“That’s particularly important where
capital markets are less well developed,
where you don’t have the breadth of
individual financiers potentially interested
in small projects,” MacNaughton notes.
The World Bank, Bank of America
Merrill Lynch, and the Brazilian
Development Bank also contributed to
the report, available on:
http://bit.ly/1JK2DKb ●
New proposal for
climate deal released
The UNFCCC, the UN’s climate body,
has released fresh proposals for a
global climate deal. The new 83-
page “consolidated” document (bit.
ly/1MpAtJw), released in late July,
“provides for the first time clarity on
what could be contained within the
emerging legal agreement in Paris,” said
a UNFCCC statement.
One of the proposals is for carbon
reduction levels to become legally
binding, while it will be up to countries
to decide how they will meet their
commitments. Governments will now
use this text as basis for the next round
of talks in Bonn late September.
As of this writing, 47 of 194 countries,
accounting for 59% of global emissions,
have submitted their national emissions
reduction plans, formally known
as Intended Nationally Determined
Contribution (INDCs). ●
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Kenya breaks ground
on Africa’s largest wind farm
Construction has begun on the Lake Turkana Wind Power project in
northeast Kenya. When completed, the 310 MW project – equivalent to
about 20% of Kenya’s current installed capacity – will overtake Morocco’s
Tarfaya Wind Farm as Africa’s largest wind power project.
At a cost of Ksh 70 billlion ($686
million), the project will also be the
biggest single private investment in
Kenya’s history.
Developers said the wind farm will start
supplying 50–90 MW in September and
will be fully operational by mid-2017.
Last month Kenya pledged to reduce
its greenhouse gas emissions by
30% by 2030, in its formal sub-
mission to the UN ahead of the Paris
climate talks.
The Kenyan government is working
towards raising the country’s wind
capacity by 620 MW as part of plans
over 2013–2016 to up generation
capacity by 5000 MW. ●
News Focus
NEWS IN BRIEF
Oman to build solar
thermal plant for
enhanced oil recovery
Petroleum Development Oman, Oman’s
largest producer of oil and gas, has
announced plans to build a 1021 MW
solar thermal plant to be used for
enhanced oil recovery (EOR) in the south
of the country.
The steam generated will help extract
heavy and viscous oil at the Amal oilfield,
which currently burns natural gas for
EOR. The project, to be developed with
US company GlassPoint Solar, will break
ground this year with steam generation
from the first module expected in 2017.
Once completed, the plant will save 5.6
trillion BTU of natural gas each year, an
amount that could be used to provide
electricity to 200,000 people.
Agenda agreed for
financing sustainable
development
The UN Third International Conference
on Financing for Development in the
Ethiopian capital Addis Ababa saw 193
UN member states agree on more than
100 measures to finance sustainable
development. Among the action points is
the setting up of a Global Infrastructure
Forum to bridge the building gaps in
transport, energy, and water. Countries
also agreed to re-affirm the commitment
to phase out inefficient fossil fuel
subsidies. The event is widely seen as a
stepping stone for countries to finance
and adopt a set of new sustainable
development goals in September.
China’s State Grid to build
transmission line from hydro plant
Belo Monte in Brazil
Brazil has awarded China’s State Grid the right to build and operate a second
transmission line for Belo Monte, the world’s third largest hydropower plant.
The line will link the 11.2 GW dam in the north to the power consumption
centres of Rio de Janeiro and São Paulo in the southeast.
At 2500 km and due to be completed in
December 2019, the line will be Brazil’s
longest and requires an investment of 7
billion reais (US$2.25 billion).
State Grid is seeking a local partner for
the project. This second line follows the
first bid won last year by a consortium
consisting State Grid (51%), Furnas,
and Eletronorte.
The project is expected to help Brazil
meet its soaring electricity needs more
securely. Last year’s severe drought
brought reservoir levels in the centre
and south of the country to historic
lows, sparking a power crisis. About
80% of Brazil’s electricity comes from
hydropower. ●
World Bank invests $700 million
in gas project in Ghana
The World Bank has approved a record investment of $700 million
in guarantees for Ghana’s Sankofa Gas Project, which it calls “a
transformational project that will help address the country’s serious
energy shortages by developing new sources of clean and affordable
natural gas for domestic power generation”.
The guarantees ($500 million for
gas purchases by Ghana National
Petroleum Corporation and $200
million to secure financing from its
private sponsors) are expected to
mobilize $7.9 billion in new private
investment for offshore natural gas,
says the World Bank.
Ghana has suffered frequent power
outages due to water shortages for
hydropower, erratic gas supplies
from external sources and delays in
the development of domestic gas
resources. The Government has
spent more than $500 million on fuel
subsidies in recent years. ●
Kenyan President Uhuru Kenyatta
lays the foundation stone of the
Lake Turkana Wind Power project

Ecuador is in the midst of an energy makeover. By the end of next year,
93% of the country’s electricity will be derived from hydropower. But
the country’s energy transformation involves much more than that: it
includes far-reaching energy efficiency programs, radical changes in
the oil, gas and transport sectors and far-reaching integration of energy
systems with its neighbouring countries. When the $7 billion program will
be completed, by 2017, it will “constitute a huge competitive advantage
for Ecuador”, says Gabriel Arguello, Secretary-General of the Ecuador
Member Committee of the World Energy Council and Executive Director of
Ecuador’s Independent System Operator (ESO) CENACE.
Currently eight new hydroelectric
projects are being built in Ecuador under
direct management of the State. Some
of them will start operation this year,
but most in 2016. When they are ready,
93% of electrical energy consumed in
Ecuador will come from hydropower.
Thermal generation will have been
reduced from 44% in 2007 to a few
percentage points.
This is a pretty radical change, but
Ecuador’s energy transition involves
a lot more. It includes promotion of
electric cars, reduction of losses in
the generation and distribution of
electricity, and more efficient use of
energy in industry and households,
including a large-scale changeover from
gas-based (LPG) cooking to induction-
based cooking appliances as well as a
complete replacement of incandescent
lamps with compact fluorescent lamps.
The country is also investing in other
forms of renewable energy, including
wind power – the 16.5 MW wind farm in
Villonaco in the south is one of the few in
high hills in the world – and in solar, e.g.
in the Galapagos Islands.
And Ecuador is making some radical
changes to its fossil fuel sector: it is
constructing new efficient combined-
cycle gas plants and a big oil refinery
that will allow the country to export
higher-value oil products.
For all these reasons, Ecuadorian energy
policy is very relevant to other countries,
says Gabriel Arguello. “We take a long-
term perspective towards sustainable
development. Changing our energy
matrix to a more efficient one will allow
us not only to reduce our emissions of
greenhouse gases, but also to improve
our production matrix, offering a better
and more competitive framework for
industry as well as reducing the money
that goes into energy subsidies.”
Another key element of Ecuador’s
energy strategy concerns regional
energy integration. The governments
of Colombia, Ecuador, Peru, Chile
and Bolivia are working on a great
interconnection project, Sistema de
Interconexión Eléctrica Andina (SINEA),
which will allow electricity exchanges
and transactions across the Andean
region by 2020. Arguello, who served as
President of the Comisión de Integración
Energética Regional (CIER), responsible
for the project, says that this will be an
important step to ensure sustainable
development in the region.
Regional integration will be at the centre
of discussion during the World Energy
Council Latin American regional meeting
in Quito on 10 and 11 September. At
the headquarters of the Union of South
American Nations (UNASUR), who will
be co-hosts, representatives from public
and private sector will discuss priority
integration projects and the future
energy landscape.
“The challenge of regional integration
is huge”, says Arguello. “Especially to
create a strong regulatory framework
that will provide legal certainty, equity
and efficiency for all participants.” But
the benefits will be many. “It will allow us
to utilise the comparative advantages
of local energy resources, to exploit
economies of scale for new generation
capacity, reduce supply risks and
costs of reliability, and help integrate
intermittent renewables such as wind
and solar. In addition, for Ecuador the
integration will allow the strengthening
of bilateral relations with its neighbours
Colombia and Peru.”
None of this means the Ecuador
energy transition is easy. “The biggest
challenge is the natural resistance to
change”, says Arguello. This must be
countered “with an adequate incentives
policy and a communication campaign.”
The government is considering
regulatory changes such as the
introduction of hourly rates for
electricity and reducing taxes on
electric water heating systems and
electric cars. In addition, investments
need to be made to strengthen the
country’s distribution grids, but also in
metering systems and indoor electric
installations.
With over $7 billion to spend in the
period 2009-2017, the Ecuadorian
state is the main investor in the
energy transition. The money will be
well spent, says Arguello. “The future
availability of clean, renewable and
cheap energy will constitute a huge
competitive advantage for Ecuador.” ●
country focus
The Ecuadorian energy transformation:
“This will give us a
huge competitive advantage”
Wind farm at Villonaco. Photo Franzpc

events
About the COUNCIL
The World Energy Council has been at the
forefront of the energy debate for nearly a
century, guiding thinking and driving action
around the world to achieve sustainable and
affordable energy for all. It is the UN-accredited
energy body and principal impartial network,
representing more than 3,000 organisations –
public and private – in almost 100 countries.
Independent and inclusive, the Council’s work
covers all nations and the complete energy
spectrum – from fossil fuels to renewable
energy sources.
Join our network
Join the debate and help influence the energy
agenda to promote affordable, stable and
environmentally sensitive energy for all.
As the world’s most influential energy network,
the World Energy Council offers you and your
organisation the opportunity to participate in
the global energy leaders’ dialogue.
Find out how you can:
• join a Member Committee;
• become a Project Partner, Patron or
Global Partner;
• take part in annual industry surveys, study
groups and knowledge networks;
by visiting our website and contacting our team
on: http://www.worldenergy.org/wec-network
Contact us
World Energy Council
62–64 Cornhill,
London EC3V 3NH
United Kingdom
Tel: +44 20 7734 5996 Fax: +44 20 7734 5926
www.worldenergy.org
@WECouncil
See more COUNCIL events AT
www.worldenergy.org/events/future
Executive Assembly
Addis Ababa, Ethiopia
26–30 October 2015
The World Energy Council’s annual
meeting, welcoming the Council’s
community and representatives from
the African and global energy sectors,
will discuss sustainable energy
systems on national, regional and
global levels. Together with more than
20 Energy ministers that have already
confirmed their attendance, leaders
from business, finance and academia
will share best practice and identify
solutions to the energy trilemma during
dedicated sessions including the
Trilemma Summit, Future Energy
Leaders’ Summit, and the private
invitation-only World Energy Leaders’
Summit. The event is hosted by the
Prime Minister of Ethiopia under the
theme of “Unleashing the power of
regional market creation”.
http://bit.ly/1SopMvr
REGIONAL EVENT
South American Energy Forum
10-11 September
Quito, Ecuador
The World Energy Council will be
hosting its 2015 Latin American
regional meeting in Quito, Ecuador on
10 and 11 September. The meeting
will be held at the headquarters of
the Union of South American Nations
(UNASUR) who will co-host the event.
It will include top-level participants
from both the public and private
sector. It is expected that UNASUR
ministers will approve the principles of
the relaunched Latin American energy
strategy during the meeting which will
be opened by the President of Ecuador.
The event will include discussions
on energy scenarios and the role of
regional integration.
Contact: Cristina Morales
morales@worldenergy.org
International Beirut
Energy Forum
Beirut, Lebanon
9–11 September 2015
With continuous oil price fluctuations,
how is the world’s sustainable energy
sector being affected? What are the
dynamics of fuel-based economy and
sustainable energy development?
Energy ministers and leaders from
around the world will look at these
and other issues at this platform
for discussion of topics related to
renewable energy sources, energy
efficiency, and green buildings in
the Middle East and North Africa
(MENA) region.
Catch up on last year’s event at:
http://bit.ly/15InlgB
Contact: Pierre El Khoury
pierre.khoury@lcecp.org.lb
Alternatives for social and
environmental viability
of large energetic projects
Bogotá, Colombia
27 August 2015
The event will identify practices
and policy guidelines to promote
efficient management of social and
environmental impacts to ensure the
energy sustainability in Colombia.
http://www.cocme.org/
Contact: Daniel Diaz
a.tecnico@cocme.org
Annual Joint Energy Congress
Acapulco, Mexico
9–11 September 2015
The Council´s Mexican Member
Committee will host its 2015 Congress:
Progress in the Implementation of
the Energy Reforms in Mexico. The
Committee is organising the session
Energy Trilemma and Competitive
Energy Markets. It will discuss the
situation in Mexico as regards the three
dimensions of the energy trilemma:
equity, security and sustainability.
http://www.wecmex.org.mx/
Contact:
Dr. Pablo Marcelo Mulás del Pozo
pmulas@iie.org.mx
events member committee events
2016 World Energy Congress
Istanbul, Turkey
9–13 October 2016
As the triennial flagship event of the
World Energy Council, the World
Energy Congress enables dialogue
among Energy Ministers and leaders
from business, finance and academia
from around the world. At the 23rd
edition in Istanbul, energy leaders
will seek options for delivering
sustainable energy systems on the
national, regional and global level.
Under the theme “Embracing New
Frontiers”, the Congress is
expected to bring together up to
ten thousand participants, including
100 energy Ministers.
You can register at the official
congress website
http://www.wec2016istanbul.org.tr
The first 100 to register get
a discount and a free Istanbul
city tour.
Follow the Congress on Twitter:
https://twitter.com/WECongress
WORLD ENERGY
CONGRESS
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World Energy Focus - Agosto 2015

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